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SEOUL STR IRE water carriage and there would be danger of inland centers approaching it in importance. The rail rate from New York to Chicago, which is the basing rate for adjoining territory, is influenced by the water rates, and is lower than the rail rates to points not on the water. The Interstate Commerce Commission, in regulating rates, recognizes the principle that cities enjoying water competition are entitled to lower rail rates than points not so advantageously located. © RAIL AND WATER RATES. "Now, the balance between rail and water rates at Chicago is so delicate that it does not take much to turn the scale one way or the other. Be- cause Of. the: fact. that. the water haul from Buffalo to Chicago is about 400 miles further than the rail haul, the cheapnéss of water as compared with rail carriage is not so marked in the ,case-.of. Chicago as i as, for exainple, with Duluth. But while Du- luth gets a larger comparative saving by the water haul, it does not offer the same inducements to the railroads. Let. Chicago, through its failure to provide adequate harbor facilities, de- prive itself of the benefit of water transportation, and it will soon see the railroads doing less to advance its in- terests, because the incentive to do so will be removed. As long as the water route is available, the railroads must be on the alert to serve Chicago well and cheaply. It is significant that the present movement for the general increase of railroad freight- rates comes at a time when the railroads have the water rate situation betweei Chicago and New York well in hand, as will be shown later in this report. "The point sought to be made here is that the improvement of water terminal facilities is of great import- ance, not only because of the' traffic that can actually be handled, but even more as a means of stimulating thé railroads to do their utmost for Chi- cago. Another consideration of weight is that the total freight handling ca- pacity of the city is greatly increased over what would be the case if dependence were placed on rail fa- cilities alone. Water transportation is more elastic than rail, and can ex- pand more rapidly to meet the needs in periods of congestion. When the railroads are unable to do all the business because of its great volume, the vessels on the lakes will greatly facilitate the movement of goods of such ports as are equipped with ade- quate water terminal facilities. "While it may be true that the fu- ture growth of water traffic cannot be TAE MARINE REVIEW predicted with mathematical accuracy and shown to be of such great vol- ume as to warrant tremendous out- lays at once for harbor improvement, it cannot be gainsaid that there is more business to be done by water in Chicago than can 'be handled prop- erly with present facilities. The case would seem to be clear, therefore, for a comprehensive plan of harbor improvement to be carried out only so rapidly as may be necessary to keep the facilities all the time a little in advance of the actual needs of commerce, "With respect to lines of lake com- merce, Chicago's interest would seem to lie most in the direction of in- creasing the package freight or miscellaneous cargo business. * "Tron ore, which constitutes about one-half the total tonnage of lake commerce, is little seen in the Chicago harbor. Nor do we care for it there. The great blast furnaces do not be- long in the center of the city. They are better located for all concerned where they are, at South Chicago, In- diana Harbor and Gary. - "Chicago is still the world's greatest lumber market, although the arrivals by water have greatly decreased. The water business is still of importance, however, and many lumbermen think the present volume of business may be maintained for a generation or more. At any (rate, it: ts ainiportant that the city have facilities for hand- ling such quantity of lumber as may continue to come here, even though no increase may be looked for, owing to the disappearance of the timber sup- ply at points available for water trans- portation. The place where the lum- ber is wanted appears to be the Chi- cago river and not the Calumet. For the year 1907 Chicago received, in round numbers, 2,400,000,000 ft. of lumber, of which 400,000,000 ft., or one-sixth, came by water. Not many years ago the receipts of lumber by water greatly exceeded those by rail. "The coal unloading facilities in the Chicago river are not as good as at other leading lake ports. Perhaps they are as good as are warranted by the condition of the harbor. River improvement might be expected to lead to the introduction of better un- loading facilities. While the Calumet river may answer as a trans-shipping point, it cannot meet the needs of Chicago proper as a receiving point for coal for consumption in this city. GRAIN ELEVATORS DECREASING. "The number of grain elevators on the Chicago river is growing smaller. As elevators have been destroyed by Za fire or other cause they have not been rebuilt. The center of the wheat trade is moving westward and north- ward away from Chicago. This city, however, while it does not lead in wheat, is stilt the world's greatest grain market. The center of the corn supply is not likely to move away. Much of the grain storage of the city is on the Calumet river. Except for one consideration it might be a mat- ter of indifference to the community at large whether the grain center be on One river or the other, apart from the question of preserving investments already made. That consideration has to do with the encouragement of the package freight business. While the total volume of freight east is greater than the volume west, more package freight moves west that east. The package boats, therefore, need grain cargoes east, in part at least. And as most of the package freight comes in- to the Chicago rather than the Calq- met river, it is highly important that there be elevators in the Chicago harbor to supply the package boats with their return cargoes of grain. These boats would find it. disadvan- tageous to be obliged always to go to South Chicago for grain, especially for partial cargoes, after unloading in the Chicago river. This constitutes an argument for encouraging at least a considerable number of grain ele- vators to stay in the Chicago harbor. "Because iron ore, grain, coal and lumber constitute the principal volume by weight of lake commerce, it is assumed in some quarters that they alone are worthy of serious considera- tion. The package freight or miscel- laneous cargo business, however, is of very great importance. The great dry goods and grocery houses of Chicago actually bring in enormous quantities of merchandise by water. The ability to do so constitutes the principal reason for the pre-eminence of this city as a wholesale and jobbing center. It is difficult to obtain precise in- formation as to the volume and value of this traffic 'because facts of this. nature are not freely given to the public by concerns engaged in keen competition with one another. SUGGESTIONS FOR IMPROVEMENT. "Interviews with vessel men and shippers disclose great variations in views as to the ultimate solution of Chicago's harbor problem. There is to some degree unanimity of senti- ment with respect to the next steps in the line of improvement. "Whatever the ultimate solution may be, it is evident that the Chicago river must continue to serve as the *